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Gold

Gold yesterday settled up by 0.49% at 51157 as a sell-off in dollar and stock markets bolstered bullion's safe-haven appeal. The dollar is easing again and it will continue to support gold until there is some hawkish statement from the Federal Reserve. European Central Bank President Christine Lagarde said she saw the ECB's deposit rate at zero or "slightly above" by September end, implying an increase of at least 50 basis points from its current level. Losses in dollar underpins gold prices, with risk appetite improving worldwide and hurting dollar demand. Risk appetite improved as China loosens up restrictions as Covid 19 infections decline, while investors have completely priced in future US rate hikes with the dollar. St. Louis Federal Reserve Bank President James Bullard reiterated his view that the U.S. central bank ought to raise interest rates to 3.5% this year to get high inflation more quickly under control. "The more we can frontload and the more we can get inflation and inflation expectations under control the better off we will be," Bullard said in an interview. "And in the out years, '23 and '24, we could be lowering the policy rate because we've got inflation under control." Technically market is under short covering as market has witnessed drop in open interest by -7.38% to settled at 4791 while prices up 250 rupees, now Gold is getting support at 50942 and below same could see a test of 50728 levels, and resistance is now likely to be seen at 51308, a move above could see prices testing 51460.

Trading Ideas:
# Gold trading range for the day is 50728-51460.
# Gold prices extended gains as a sell-off in dollar and stock markets bolstered bullion's safe-haven appeal.
# Losses in dollar underpins gold prices, with risk appetite improving worldwide and hurting dollar demand.
# Risk appetite improved as China loosens up restrictions as Covid 19 infections decline, while investors have completely priced in future US rate hikes.

Silver

Silver yesterday settled up by 1.1% at 61976 as the dollar fell after ECB President Christine Lagarde surprised market players with a blogpost stating that the central bank could increase rates in July. Risk sentiment deteriorated in financial markets, as a broad package of Chinese measures to support the economy underwhelmed investors and Snapchat parent Snap warned of deteriorating macroeconomic trends. Kansas City Fed President Esther George said she expects the U.S. central bank to raise interest rates to 2 percent by August, with further action likely to be guided by how surging inflation cools off. U.S. business activity slowed moderately in May as higher prices cooled demand for services while renewed supply constraints because of COVID-19 lockdowns in China and the ongoing conflict in Ukraine hampered production at factories. S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to a reading of 53.8 this month from 56.0 in April. That growth pace, which was the slowest in four months, was attributed to "elevated inflationary pressures, a further deterioration in supplier delivery times and weaker demand growth." Banks and insurers that fail to manage climate risks as a "first-order" issue could face a 10% to 15% hit to annual profits and higher capital requirements, the Bank of England (BoE) said. Technically market is under short covering as market has witnessed drop in open interest by -12.26% to settled at 12803 while prices up 673 rupees, now Silver is getting support at 61279 and below same could see a test of 60582 levels, and resistance is now likely to be seen at 62454, a move above could see prices testing 62932.

Trading Ideas:
# Silver trading range for the day is 60582-62932.
# Silver inched higher as the dollar fell after ECB President Lagarde surprised market players stating that the central bank could increase rates in July.
# Dollar hits fresh one-month low
# ECB's Lagarde sees rate at zero or slightly above by Sept.

Crude oil

Crude oil yesterday settled down by -0.36% at 8512 amid concerns about the outlook for energy demand due to the impact of China's Covid-19 curbs. Another source of support is U.S. gasoline demand. Memorial Day weekend travel is expected to be the busiest in two years as more drivers hit the road and shake off coronavirus lockdowns despite high pump prices. India's Oil Minister Hardeep Singh Puri told that a crude oil price of $110 a barrel was not sustainable, as the world faces an energy price crisis which is contributing to rising global inflation. As countries around the world struggle with the impact of inflation on disposable income, India's Commerce Minister Piyush Goyal said on the same WEF panel that food inflation in the South Asian country was at a "manageable level". The European Union's inability to reach a final agreement on banning Russian oil after its invasion of Ukraine, which Moscow calls a "special operation", has also stopped oil prices from climbing much higher. Money managers raised their net long U.S. crude futures and options positions in the week to May 17, the U.S. Commodity Futures Trading Commission (CFTC) said. The speculator group raise its combined futures and options position in New York and London by 31,067 contracts to 286,339 during the period. Technically market is under long liquidation as market has witnessed drop in open interest by -3.59% to settled at 6496 while prices down -31 rupees, now Crude oil is getting support at 8419 and below same could see a test of 8327 levels, and resistance is now likely to be seen at 8628, a move above could see prices testing 8745.

Trading Ideas:
# Crude oil trading range for the day is 8327-8745.
# Crude oil settled lower amid concerns about the outlook for energy demand due to the impact of China's Covid-19 curbs.
# The U.S. Strategic Petroleum Reserve (SPR) fell by 5 million barrels to 538 million barrels, its lowest since November of 1987.
# Money managers raised their net long U.S. crude futures and options positions in the week to May 17

Nat.Gas

Nat.Gas yesterday settled up by 2.17% at 682.3 as power generators and liquefied natural gas (LNG) exports plants consumed more of the fuel. Power and gas prices soared last week as homes and businesses cranked up their air conditioners to escape a spring heatwave. To keep the lights on, generators burned more gas to produce power. Over the past couple of weeks, the amount of gas in U.S. storage compared to normal levels for this time of year has fallen below the amount of gas available in Northwest European stockpiles. That's because much higher European prices continue to attract pipeline exports from Russia and LNG tankers from around the world. Last week, speculators increased their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for the first time in five weeks to their highest since early May, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. Refinitiv projected average U.S. gas demand, including exports, would ease from 89.4 bcfd this week to 88.0 bcfd next week. Those forecasts were lower than Refinitiv forecast. The average amount of gas flowing to U.S. LNG export plants has risen to 12.4 bcfd so far in May from 12.2 bcfd in April. Technically market is under short covering as market has witnessed drop in open interest by -59.1% to settled at 775 while prices up 14.5 rupees, now Natural gas is getting support at 669 and below same could see a test of 655.7 levels, and resistance is now likely to be seen at 694.3, a move above could see prices testing 706.3.

Trading Ideas:
# Natural gas trading range for the day is 655.7-706.3.
# Natural gas jumped as power generators and liquefied natural gas (LNG) exports plants consumed more of the fuel.
# The amount of gas in U.S. storage compared to normal levels for this time of year has fallen below the amount of gas available in Northwest European stockpiles.
# Speculators increased their net long futures and options positions for the first time in five weeks to their highest since early May

Copper

Copper yesterday settled down by -0.52% at 777.45 as rising COVID-19 cases and lockdowns in top consumer China stoked demand worries, although a pullback in the U.S. dollar limited losses. The safe-haven greenback has been falling broadly alongside a decline in Treasury yields from multi-year peaks, with aggressive easing by the Federal Reserve already priced in. Beijing stepped up quarantine efforts to end its month-old COVID-19 outbreak as fresh signs of frustration emerged in Shanghai, where some bemoaned unfair curbs with the city of 25 million preparing to lift a prolonged lockdown in just over a week. China will broaden its tax credit rebates, postpone social security payments and loan repayments, roll out more investment projects and take other steps to support the economy, state television quoted the cabinet as saying. Japan's manufacturing activity expanded at the slowest pace in three months in May, as supply bottlenecks due to shortages of parts and China's lockdowns caused output and new orders growth to slow. China's property market woes are likely to worsen this year with prices remaining flat and sales and investment falling further. The global copper market is expected to see a surplus of 142,000 tonnes this year and of 352,000 tonnes in 2023, the International Copper Study Group (ICSG) said. Technically market is under fresh selling as market has witnessed gain in open interest by 34.83% to settled at 3395 while prices down -4.1 rupees, now Copper is getting support at 771.6 and below same could see a test of 765.8 levels, and resistance is now likely to be seen at 783.7, a move above could see prices testing 790.

Trading Ideas:
# Copper trading range for the day is 765.8-790.
# Copper prices slipped, as rising COVID-19 cases and lockdowns in top consumer China stoked demand worries
# China has announced a raft of stimulus package to support the economy.
# China's property market woes are likely to worsen this year with prices remaining flat and sales and investment falling further.

Zinc

Zinc yesterday settled down by -0.54% at 323.2 as the market has basically digested the bullish factors from expected loosening of real estate policies, after many places in China have lowered the first home loan interest rate. The global zinc market moved to a deficit of 6,300 tonnes in March from a revised surplus of 26,500 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a surplus of 14,300 tonnes in February. During the first three months of 2022, ILZSG data showed a surplus of 11,000 tonnes versus a surplus of 108,000 tonnes in the same period of 2021. Around 13.5 million tonnes of zinc is produced and consumed each year. Around 13.5 million tonnes of zinc is produced and consumed each year. Data released by the London Metal Exchange (LME) showed that LME zinc inventory is still in a downward channel, and the decline in inventory has slowed down in recent days. The latest inventory was 86,125 mt as of May 17, the lowest in over two years. SHFE zinc stocks dropped by 3.22% on a weekly basis to 167,066 mt in the week of May 13, a two-and-a-half-month low. Technically market is under fresh selling as market has witnessed gain in open interest by 31.05% to settled at 823 while prices down -1.75 rupees, now Zinc is getting support at 320.6 and below same could see a test of 317.9 levels, and resistance is now likely to be seen at 325.7, a move above could see prices testing 328.1.

Trading Ideas:
# Zinc trading range for the day is 317.9-328.1.
# Zinc dropped as the market has basically digested the bullish factors from expected loosening of real estate policies
# The global zinc market moved to a deficit of 6,300 tonnes in March from a revised surplus of 26,500 tonnes a month earlier
# LME zinc inventory is still in a downward channel, and the decline in inventory has slowed down in recent days.

Aluminium

Aluminium yesterday settled down by -2.61% at 242.55 as downstream demand in China has not fully recovered yet, and spot aluminium was still offered with discounts. China’s primary aluminium exports in April fell 24.2% on the month, up 64 times on the year. However, downside seen limited amid optimism over the easing of some COVID-19 restrictions in top consumer China lifted demand prospects. China lowered its benchmark reference rate for mortgages for the second time this year, as Beijing is keen to revive credit demand to prop up the economy. LME aluminium inventories have started a relatively smooth road to destocking. Last week, inventories continued to decline. The latest inventory level was 532,500 mt as of May 16, which fell to a new low in nearly 17 years. Estimated Chinese production rose to 3.29 million tonnes in April from 3.257 million tonnes a year earlier, according to IAI data. China's aluminium production rose 0.3% to 3.36 million tonnes in April from a year earlierFor the first four months of the year, China produced 13.01 million tonnes, a drop of 0.2% from the same period last year, the data showed. According to customs data, China’s import volume of unwrought aluminium alloys in April 2022 was 106,000 mt, a year-on-year increase of 19.2% and a month-on-month decrease of 12.1%. Technically market is under fresh selling as market has witnessed gain in open interest by 21.85% to settled at 2208 while prices down -6.5 rupees, now Aluminium is getting support at 240 and below same could see a test of 237.4 levels, and resistance is now likely to be seen at 247.2, a move above could see prices testing 251.8.

Trading Ideas:
# Aluminium trading range for the day is 237.4-251.8.
# Aluminium dropped as downstream demand in China has not fully recovered yet, and spot aluminium was still offered with discounts.
# LME aluminium inventories have started a relatively smooth road to destocking. Last week, inventories continued to decline.
# Global aluminium output flat y – o – y at 5.599 mln T in April – IAI

Mentha oil

Mentha oil yesterday settled down by -3.2% at 1082.6 on profit booking after prices seen supported amid low production this season and improving demand post-pandemic. Support also seen with Rupee weakness export demand is going to be firm also post pandemic global demand is improving. However, upside seen limited as Synthetic Mentha supply remains uninterrupted. The harvest is expected to be almost the same as last year's in Barabanki area but harvesting this year is expected to be delayed. Crop growth is poor this year compared with last year despite use of fertiliser. The plant is about 25% less than the total crop, water is being felt after every three days. Prices gained on reports that due to poor prices farmers has shifted to other crops resulting lower production. Germany's BASF said it would have to stop production if natural gas supplies fell to less than half its needs, as the world's largest chemicals group warned of the damage to its operations from Europe's power crunch. Mentha farming has lost its allure in Uttar Pradesh as farmers struggle without stable price, MSP and government support. High input costs and lack of support price have drastically brought down the return of farmers who have already been struggling to increase their incomes. In Sambhal spot market, Mentha oil dropped by -15 Rupees to end at 1191 Rupees per 360 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 25.31% to settled at 1010 while prices down -35.8 rupees, now Mentha oil is getting support at 1067.3 and below same could see a test of 1051.9 levels, and resistance is now likely to be seen at 1108.8, a move above could see prices testing 1134.9.

Trading Ideas:
# Mentha oil trading range for the day is 1051.9-1134.9.
# In Sambhal spot market, Mentha oil dropped  by -15 Rupees to end at 1191 Rupees per 360 kgs.
# Mentha oil dropped on profit booking after prices seen supported amid low production this season and improving demand post-pandemic.
# Synthetic Mentha supply remains uninterrupted.
# With Rupee weakness export demand is going to be firm also post pandemic global demand is improving.
 

Turmeric
Turmeric yesterday settled down by -0.63% at 8206 due to lower demand and sufficient supplies in the physical market. The arrivals have decreased in the physical market due to lower prices and lack of aggressive buying by bulk traders. Currently, export demand is normal but is expected to pick up. As per latest export figures, turmeric exports in Feb 2022 were lower by 17% y/y at 10400 tonnes vs 12,575 tonnes while in FY 2021/22 (Apr-Feb), exports down 20% at 1.37 lakh tons compared to last year but higher by 8.3% compared with 5-year average. Domestic demand reduced particularly with the new season crop supplies from Marathwada region of Maharashtra during April. Export demand too reported sluggish despite report of some queries from Bangladesh. Turmeric exports fell by 18% on y-o-y basis to 1.37 lakh tonnes during April[1]February 2021-22 over corresponding period of the previous year. Turmeric all India production for 2022 is estimated at 4.67 lakh tonnes, revised after crop damage due to excessive rainfall in Maharashtra, Andhra Pradesh and Telangana during October and November. Earlier estimate was 4.89 lakh tonnes. In Nizamabad, a major spot market in AP, the price ended at 8429.05 Rupees gained 93.55 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -0.21% to settled at while prices down -52 rupees, now Turmeric is getting support at 8134 and below same could see a test of 8064 levels, and resistance is now likely to be seen at 8284, a move above could see prices testing 8364.

Trading Ideas:
# Turmeric trading range for the day is 8064-8364.
# Turmeric dropped due to lower demand and sufficient supplies in the physical market.
# The arrivals have decreased in the physical market due to lower prices and lack of aggressive buying by bulk traders.
# Turmeric exports in Feb 2022 were lower by 17% y/y at 10400 tonnes vs 12,575 tonnes
# In Nizamabad, a major spot market in AP, the price ended at 8429.05 Rupees gained 93.55 Rupees.

Jeera

Jeera yesterday settled up by 0.39% at 21745 because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities. The low yield in India will affect the global prices as the country is the largest producer of jeera or cumin in the world. Total cumin output is estimated to have declined about 35% year-on-year to 558 million tonnes in 2022. The main reason for the low yield and low acreage under cultivation is that during the cumin sowing period (October-December 2021) farmers shifted to gram and mustard whose prices were higher than that of cumin. Secondly, excess rainfall in the key cumin belts of Dwarka, Banaskantha and Kutch in Gujarat, and Jodhpur and Nagaur in Rajasthan increased the probability of wilt attack, preventing farmers from sowing the crop. Cumin exports declined ~24% on-year in fiscal 2022 (April 2021- February 2022), owing to 51% drop in exports to China (accounts for one-third of exports) following a pesticide residue issue in Indian consignments. Given that production has likely declined by a significant ~35%, exports too are expected to fall this fiscal. In Unjha, a key spot market in Gujarat, jeera edged down by -15.85 Rupees to end at 21600.5 Rupees per 100 kg.Technically market is under short covering as market has witnessed drop in open interest by -2.84% to settled at while prices up 85 rupees, now Jeera is getting support at 21580 and below same could see a test of 21410 levels, and resistance is now likely to be seen at 21855, a move above could see prices testing 21960.

Trading Ideas:
# Jeera trading range for the day is 21410-21960.
# Jeera gained because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities.
# The low yield in India will affect the global prices as the country is the largest producer of jeera or cumin in the world.
# Total cumin output is estimated to have declined about 35% year-on-year to 558 million tonnes in 2022.
# In Unjha, a key spot market in Gujarat, jeera edged down by -15.85 Rupees to end at 21600.5 Rupees per 100 kg.

Cotton

Cotton yesterday settled down by -1.04% at 47610 due to the high price of cotton, the Spinners' Association of South India has announced the closure of the mills, due to which most of the smaller mills have closed down and the demand for cotton will be seen to decrease due to decrease in production in the big mills. In North India's states of Punjab, Haryana and Rajasthan, the water from canals will be released late, which will lead to late sowing of cotton, but there is no report of the possibility of very low sowing. Cotton sowing in North India is expected to increase by 15% from last year. Texas, had concerns about production due to lack of rainfall, but with good rainfall in Texas for the past one week, there is no problem with U.S. cotton production. Cotton sowing in China has increased, but with only one to two percent increased, the crop is unlikely to grow much. Similarly, in Pakistan, production is also expected to increase due to increase in sowing from last year. The USDA in its latest report lowered U.S. production by one million bales as the drought situation in Texas is predicted to reduce harvested acres. In spot market, Cotton dropped by -350 Rupees to end at 49110 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 6.49% to settled at 2558 while prices down -500 rupees, now Cotton is getting support at 47420 and below same could see a test of 47230 levels, and resistance is now likely to be seen at 47910, a move above could see prices testing 48210.

Trading Ideas:
# Cotton trading range for the day is 47230-48210.
# Cotton dropped as most of the smaller mills in South India have stopped production and the big mills have reduced the production.
# Indian cotton's base being much higher than that of the foreign market has increased the compatibility for imports.
# With increased import of cotton, the carryforward stock is expected to rise to 45 lakh bales at the end of the season.
# In spot market, Cotton dropped  by -350 Rupees to end at 49110 Rupees.
 

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